Quiz #624 answers

• 1. When a nation is generating large external surpluses, it can create more space for non-inflationary spending in the future if the government runs fiscal surpluses and accumulates them in a sovereign fund.

Answer: False

• 2. When output gaps are based on the concept of the NAIRU (Non-Accelerating-Inflation-Rate-of-Unemployment), the estimates produced will usually lead one to conclude that a government's discretionary fiscal position is more expansionary than it actually is.

Answer: True

• 3. A nation can run a external deficit accompanied by a larger government sector surplus (expressed as a percentage of GDP), while the private domestic sector is spending less than they are earning.

Answer: False